Puerto Rico Credit Unions Want a Solar-Powered Recovery

More than six months since Hurricane Maria hit Puerto Rico, tens of thousands of people still have no electricity. Maria Garcia Carrión isn’t one of them. She can still run her washing machine, refrigerator, computer, and lights. It’s all thanks to the self-contained solar power kit installed on her home, which sits at the far edge of Caguas, the third largest city on the island.

Before installing the solar power kit, Garcia Carrión said that the 23 cents per kilowatt hour the local power company charged would add up to a big bill at the end of each month. Since the hurricane, she and her husband had been spending roughly $400/month to keep a gas-run generator operating for two hours in the morning and evening. The solar power kit has eliminated the need to run the generator.

The kit has even inspired discussions about how to completely change the way all of Puerto Rico generates its power.

“Where I’m living,” says Garcia Carrión, “People are talking about developing community solar networks so that people who leave near others can take advantage of a community network.”

The solar power kit costs roughly $9,000 — a substantial outlay, though in Garcia Carrión’s case it was purchased as a demonstration project through the University of New Hampshire’s Carsey Center for Impact Finance. Other residents will need to finance their own, but the center has been working with Jesus Obrero Cooperativa de Ahorro y Crédito to finance the solar power kits for other families.

Jesus Obrero is part of Puerto Rico’s own network of credit unions, called the cooperativa system. The cooperativas are insured and regulated by the Puerto Rican government. The project illustrates the way community financial institutions are helping bring Puerto Rico fully back on line — and keep it there.

While the hurricane heightened the urgency of the program, Jesus Obrero has been providing loans for solar power kits for six years, says executive director, Aurelio Arroyo. The group serves roughly 10,000 people between the cities of San Juan, Guaynabo and Bayamon. Guaynabo and Bayamon have populations of roughly 240,000 and 100,000, respectively. There is still a lot of education and outreach needed, which is why the Carsey Center provided Garcia Carrión her solar power kit as well as support to Jesus Obrero for an engineer to do outreach and education work to other families.

“Guaynabo, which is part of the municipality of San Juan, still has some people without electricity,” Arroyo says.

In order to be able to offer financing to more people for solar power kits, Jesus Obrero is pursuing certification from the Department of the Treasury as a Community Development Financial Institution (CDFI).

For certification, the department requires institutions to target at least 60 percent of their lending or overall business to low-income communities and populations that have traditionally been marginalized from mainstream financial institutions. CDFI certification means that credit unions, including cooperativas, can access low-interest financing from government and philanthropy to support community economic development and can act as conduits for larger banks to meet their obligations under the Community Reinvestment Act.

Arroyo and his organization aren’t alone in eyeing the support that CDFI certification can help tap in the aftermath of Hurricane Maria. The National Federation of Community Development Credit Unions and the Carsey Center organized a February workshop on the island. The federation acts as an umbrella organization for credit unions serving low-income and other targeted communities across the United States. Some 60 local institutions attended the February workshop. The session described the process of obtaining CDFI certification, as well as outlining financing approaches for solar power kits.

The Federation is currently working with 30 cooperativas on the CDFI certification process. As of February 2018, there were no credit unions with CDFI certification in Puerto Rico, though there are 277 CDFI-certified credit unions nationwide.

Arroyo said that his organization has already submitted the paper work for CDFI certification and hopes to receive approval next year. Certification promises to position cooperativas and credit unions to access financing that can help jump start local businesses, such as those installing the solar power kits.

“Under other circumstances, it wouldn’t be possible to help low-income people get solar energy,” Arroyo says. “The banks are not financing these projects. We cooperatives are doing it, and we want a lot of families to have access to this.”

Currently, Puerto Rico has 11 federally-chartered credit unions regulated by the National Credit Union Administration (NCUA) and 116 cooperativas. The island’s cooperativa system serves nearly one million members as well as an additional 300,000 non-member clients. Collectively, these entities hold nearly $1 billion in assets, according to the Association of Puerto Rican Cooperative Executives.

“One-third of the population is connected to a cooperativa,” says José Julian Ramírez Ruíz, who runs the association, which provides technical education to cooperativa leaders.

Ramírez Ruíz thinks the entire island should be considered a CDFI target area. “The vast majority of the population is Hispanic, and a large portion lives below the poverty line,” he says. “We’ve also just been through a financial crisis and a terrible natural disaster. I personally went 111 days without electricity, living in the center of San Juan.”

William Leucht, a spokesperson for the Treasury Department’s CDFI office, said that institutions that don’t have their certification can still apply for technical assistance grants. These funds can help cooperativas and credit unions meet the requirements for the certification, for example by supporting institutions as they develop adequate lending oversight systems.

Though, as Ramírez Ruíz explains, there are few native English speakers on the island who can help complete the necessary paperwork.

If cooperativas and credit unions can offer financing to members to install more solar power kits, the Carsey Center’s Eric Hangen argues that there will be a virtuous circle of local job creation.

“They have people who are out of work. So, this will create jobs for installers. We trained six electricians [from Puerto Rico] in how to do it, and we’re sending them back for more training in a few weeks,” Hangen says. “It’s the strength of locally-controlled financial institutions stimulating local jobs for local power. There’s nowhere near that multiplier effect with other projects.”

Although Garcia Carrión´s house is in a more remote area of Caguas, Hangen says that the self-contained, “distributed,” solar power kits could offer a solution for denser areas. The kits include a battery, so the building doesn’t need to be connected to a power grid.

Hurricane Maria has created interest in solar power and so an opportunity for change, according to Arroyo. “It’s complicated to break away from the electrical energy system we had for years,” he says. “But we are still in time to make a change and to elevate the entire [island’s] economy.”

EDITOR’S NOTE: This original version of this article misstated the timing of the workshop with credit unions on CDFI certification. We’ve corrected the error.

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